Wound up over Waivers

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August 21, 2019

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by Alex Guillén (Politico's Morning Energy) EPA's internal watchdog is being asked to determine how the agency decided to grant the vast majority of exemptions from the Renewable Fuel Standard that oil refiners have requested.

EPA approved 31 petitions for waivers from the 2018 requirements, while rejecting just six, and corn-state lawmakers have howled at what they see as special favors for the oil industry. Freshman Iowa Democratic Rep. Cindy Axne (D-Iowa) today will call for an inspector general investigation into how EPA decided to expand the number of waivers it issued since Trump came into office. She will hold her press conference at Southwest Iowa Renewable Energy, an ethanol producer in Council Bluffs, Iowa, the same plant where Trump touted his action expanding sales of 15 percent ethanol.

Trump wants backsies: Trump is seeking to mollify corn farmers who are furious at the waivers, according to a Reuters report Tuesday. He personally approved EPA's decision to go ahead with the 31 waivers earlier this month, but in a two-hour-long Cabinet meeting, Trump told his staff to figure out a way to pacify the farmers. According to a refinery industry source, the president asked EPA Administrator Andrew Wheeler if he could take the exemptions back and was told he could not.

EPA says no harm, no foul: Citing data from the Energy Information Administration, EPA said the U.S. had been setting records for both ethanol production and exports. "There is zero evidence that EPA's congressionally mandated small refinery exemption program, which provides regulatory relief to small refineries around the country, has had any negative impact on domestic corn ethanol producers," EPA spokesman Michael Abboud said in a statement. EPA says it follows a process prescribed by law in granting the waivers.

Nonetheless, POET, the largest U.S. ethanol producer, said Tuesday it idled an Indiana plant due to the waivers. "Our industry invested billions of dollars based on the belief that oil could not restrict access to the market and EPA would stand behind the intent of the Renewable Fuel Standard," POET CEO Jeff Broin said in a statement. "Unfortunately, the oil industry is manipulating the EPA and is now using the RFS to destroy demand for biofuels." READ MORE

Trump EPA says 'zero evidence' of biofuel waivers hurting ethanol producers (Reuters)

U.S. biofuel credit prices jump on news of Trump meeting on farmer anger: traders (Reuters)

Trump Seeks to Allay Farm-State Uproar in Oval Office Meeting (Bloomberg)

Trump White House seeks to assuage farmer unrest over biofuel policy: sources (Reuters)

Trump reportedly orders his cabinet to calm farmers' anger over new biofuel exemptions they lobbied against (Markets Insider)

Ernst: EPA policy on ethanol leading to concern Midwest way of life "under attack" (CBS2 Iowa Fox 28; includes VIDEO)

Rep. Axne to call for federal investigation into EPA’s biofuel waiver process (Fence Post)

Oil donors shy on Trump’s 2020 campaign, for now (Houston Chronicle)

EPA gives ethanol a gut punch (Kearney Hub)

STU ELLIS: Bad timing for biofuels (Herald & Review)

Marquis Energy to cut ethanol production rates at Wisconsin plant -CEO (Reuters)

RFA Statement on EPA and Demand Destruction from Refinery Exemptions (Renewable Fuels Association)

The EPA continues to undermine biodiesel … and we’ve had enough (Biodiesel Magazine)

Marquis Energy to cut ethanol production rates at Wisconsin plant -CEO (Reuters)

Farm Tensions Escalate as USDA Staffer Is Threatened in Midwest (Bloomberg)

Reynolds, Naig urge EPA to honor the President’s promise to America’s farmers (Office of Iowa Governor Kim Reynolds)

Calls to Investigate EPA--Iowans Push Back on Small-Refinery Waivers, Demand Destructive Policies (DTN Progressive Farmer)

Farmers say Trump broke promise on ethanol with waivers to refineries (The Hill)

Iowa lawmaker asks EPA watchdog to probe refinery waivers (E&E News)

U.S. farmers, lawmakers dial up pressure on Trump over biofuel policy (Reuters)

Biofuel Allies Hike Pressure on Trump to Redistribute Quotas (Bloomberg)

Farmer's threat prompts U.S. Agriculture Department to pull staff from crop tour (Reuters)

Ethanol waivers 'clear violation' of commitments to farmers: Gov. Reynolds, Ag Sec. Naig: Cite 'devastating toll on rural families' (Gazette)

Groups slam EPA claim that SREs don’t damage ethanol demand (Ethanol Producer Magazine)

Putnam County Ethanol Shutdown Helping Point Fingers at Washington (Hoosier Ag Today)

Biden blasts Trump on ethanol waivers, China trade impasse (RadioIowa)

2020 Dems Aim to Capitalize on Trump’s Ethanol Policy (National Journal)

DuPont hosts Ernst at biofuels enzyme production plant in Iowa (Ethanol Producer Magazine)

Sen. Ernst Visits DuPont Biofuels Enzyme Plant (Energy.AgWired.com)

Cloverdale Ethanol Plant Idles Production In Latest Threat To Area Farmers (WBAA)

Lawmakers want probe after EPA allows some refineries to stop using ethanol (UPI)

Knockout ahead? Farmers keep battling (Farm Progress)

Klobuchar Says Trump Biofuel Waivers Hurt Rural Farmers (Courthouse News Service)

Trump administration sides with big oil over ethanol (Star Tribune)

A Step Backwards (Capital Journal)

ADM has had its fill of ethanol: The CEO appears to have concluded he can’t wait around for the biofuel business to recover. (Chicago Business)

Ethanol Demand Destruction Clear to See as Consumption Wanes, Prices Fall and Plants Close (Renewable Fuels Association)

RFS waivers by Trump’s EPA push World Energy to close 3 plants (Biodiesel Magazine)

Biodiesel industry condemns EPA’s grant of 31 new RFS exemptions (Biodiesel Magazine)

'A slap in the face': Trump's ethanol waivers are sparking rebellion in farm country (Des Moines Register)

ASA Concerned For Future of Biodiesel Following RFS Waivers (Wisconsin Ag Connection)

REDUCED ETHANOL PRODUCTION DISRUPTS GRAIN FLOW (Brownfield Ag News)

Biofuel industry stung by EPA's waivers (Post Bulletin)

National Biodiesel Board and American Soybean Association Request Meeting With President Trump Regarding RFS Waivers (GrainNet)

OUR OPINION: Waivers from RFS granted by EPA need scrutiny (Sioux City Journal)

Editorial: A righteous request--EPA’s apparent misuse of the small refinery hardship waiver authority should be investigated and ended (Nonpareil)

George F. Will: Casualties of friendly fire in Trump’s trade war (Akron Beacon Journal)

Excerpt from Bloomberg: Incentives for flex-fuel vehicles, high-ethanol fuel on table; Trump allies in oil and agriculture clash on biofuel mandates READ MORE

Excerpt from Reuters: Farmers bearing the brunt of Trump’s trade war with China say his support of the hardship waivers has destroyed ethanol demand.

“For the first time in my life I’ll vote for a Democrat, for Joe Biden, because Trump will have lied to us about supporting ethanol,” Mark Marquis, CEO of Illinois ethanol producer Marquis Energy, said in an interview on Tuesday. “I feel misled and lied to, quite frankly.”

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The nation’s largest ethanol producer, POET, announced on Tuesday it was cutting production at its plants and blamed the hardship waivers for the move.

“POET made strategic decisions to support President Trump’s goal of boosting the farm economy,” POET President and COO Jeff Lautt said. “However, these goals are contradicted by bailouts to oil companies.”

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One option advocated by the biofuel industry is to raise the annual amount of ethanol required to be blended into the nation’s fuel pool, or to add back the waived volume onto the annual consumption mandate that the EPA had proposed to set at 15 billion gallons for 2020. No proposals were agreed upon.

Prior to Trump’s election, just a few smaller refineries were granted relief from this requirement. Trump’s administration has vastly expanded those waivers, including granting relief to facilities run by major oil companies Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N). Trump personally directed the EPA to grant the most recent waivers, sources told Reuters.

“Not only is the government not keeping its word, but it’s also screwing the farmer when we have low prices for (corn),” said Iowa Senator Chuck Grassley, a Republican, on a weekly conference call to discuss agricultural issues.

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The EPA granted the exemptions just as Democratic candidates hoping to challenge Trump in 2020 visited the Iowa State Fair, where they sought to position themselves as fighters for ethanol.

Kelly Nieuwenhuis, a third-generation corn and soybean farmer from O’Brien County, Iowa, said he voted for Trump in 2016 but his support for the president is waning.

“I have talked to a bunch of farmers in the past few days, and they are fed up. They are not going to vote for Elizabeth Warren, but they said they are not going to vote for Trump, so they will sit this out,” Nieuwenhuis said in an interview on Monday. READ MORE

Excerpt from CBS 2 Iowa Fox 28: Sen. Ernst admitted the trade war is having an impact, but is confident that the Trump Administration can get a better deal from China once a resolution is complete. Sen. Ernst also expressed her desire to pass the United States Mexico Canada Agreement, or USMCA. The trade deal must be ratified by Congress before it can take effect.

But the biggest focus at the plant, which is a big player in the biofuels industry, was the Trump Administration's decision to grant 31 waivers to oil refineries. The waivers exempt those refineries from meeting regulations requiring ethanol production. The exemptions are supposed to go to smaller refineries, but Ernst accuses the EPA of granting waivers operated by companies like Exxon and Chevron. “There is a big concern out there that our Renewable Fuel Standard, our way of life here in the Midwest, is under attack. Now we’d like to provide these products to consumers, but if we have all of these small refineries that are receiving exemptions, they don’t have to produce.”

Sen. Ernst also told the workers that former Iowa Governor and current Ambassador to China Terry Branstad met with President Trump Monday. According to Ernst, Ambassador Branstad tried to explain to the President the importance of ethanol production to Iowa, its farmers and the greater economy they support.

As the Senator spoke, Iowa's three Democrat members of Congress were calling for the Inspector General to investigate the EPA and the decision to grant waivers to large refineries. I asked Sen. Ernst if she would support that call for a federal investigation. "I think we need to shed transparency on this and understand how they are arriving on what is a small refinery, because to me it looks like some of those small refineries are associated with much larger entities." READ MORE

Excerpt from Kearney Hub: The national media frequently turned its cameras from the bumper crop of Democratic presidential candidates at the fair and instead heard from farmers about their economic problems.

Some weren’t too pleased with the president, who told Americans that trade wars are easily won. Actually, many grain and livestock producers facing extreme uncertainty feel like big losers.

If not for ill-advised trade policies, U.S. farmers would have access to foreign markets. Instead, they have a bumper crop of uncertainty as foreign buyers who once relied upon U.S. producers now feel it’s too risky to do business with the United States.

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“Their continued handouts to the oil industry come during a time when heartland farmers are really struggling due to depressed commodity prices, flooding and trade wars. Securing access and demand for homegrown, cleaner-burning biofuels should be a top priority from an economic and environmental standpoint, not destroying the marketplace program the RFS was created for,” Berry (Roger Berry, the administrator for the Nebraska Ethanol Board) said.

The RFS makes sense. So does ethanol-blended fuel. Buying it saves families hundreds of dollars per year, it eliminates billions of dollars of foreign petroleum imports, it reduces the U.S. trade deficit and greenhouse gas emissions, and gives farmers a much needed alternative market for corn. READ MORE

Excerpt from Renewable Fuels Association: Today, an EPA spokesperson said there was “zero evidence” of demand destruction for ethanol due to the numerous refinery exemptions allowed by the Environmental Protection Agency. The following is a statement from RFA President and CEO Geoff Cooper.

“To suggest that there is ‘zero evidence’ of ethanol and corn demand destruction from small refinery waivers is as insulting as it is absurd. On the same day that EPA made this asinine assertion, two more ethanol plants announced they are idling production. At least 15 ethanol plants have now shut down or idled since EPA began its refiner bailout bonanza last year, and more than 2,500 jobs have already been affected. Ethanol production and demand continue to slide, prices continue to sink, and margins continue to bleed red. Meanwhile, the waivers are eroding corn demand, with USDA cutting its estimate of corn use for ethanol by 225 million bushels—equivalent to erasing demand for the entire Michigan corn crop. Farm bankruptcies and debt are on the rise, and farm income is plunging. Yet, EPA pretends nothing is wrong. Rome is burning, while EPA plays Nero’s fiddle.” READ MORE

Excerpt from Bloomberg: NASS crop chief Honig was scheduled to address a group on tour; ‘It’s clearly a stressful time right now,’ tour organizer says -- In a sign of rising tensions with the farm community, the Trump administration withdrew staff from a privately run tour of Midwestern corn and soybean fields after a government employee was threatened.

While the threat came from someone not involved in the Pro Farmer Midwest Crop Tour, the U.S. Department of Agriculture pulled all its staff as a precaution. Lance Honig, crops chief at the USDA’s National Agricultural Statistics Service, was scheduled to address the tour in Nebraska City Tuesday night but a video interview with him was screened instead. READ MORE

Excerpt from Farm Progress: Then, just when you began to wonder how many more blows farmers could take, enter the demand-devastating news of the Environmental Protection Agency granting 31 waivers under the Renewable Fuel Standard (RFS) for small refinery exemptions.“In fact, in the week following EPA’s Aug. 9 announcement that 31 more [small refinery exemptions] had been approved, ethanol prices plunged 18 cents/gal. (12%), corn prices fell 47 cents/bu. (11%) and [renewable identification number] credit values dropped from the already-low level of 20 cents to just 12 cents (43%). All told, the Aug. 9 announcement alone could result in a staggering $10 billion transfer of wealth from the agriculture and biofuel sectors to the oil industry. There’s your evidence of demand destruction,” Renewable Fuels Assn. president and chief executive officer Geoff Cooper wrote in a letter to EPA Administrator Andrew Wheeler.

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Members of Congress from both sides of the aisle are standing up calling out EPA’s actions. Rep. Abby Finkenauer (D., Iowa) sent a bipartisan letter signed by the House Biofuels Caucus to the Government Accountability Office formally calling for an investigation into the exemptions.

Rep. Cindy Axne (D., Iowa), another freshman lawmaker who previously has been criticized for not taking a strong stand for agriculture, called for a federal investigation of EPA by the inspector general regarding the agency’s actions. Axne announced that she was calling for the investigation at a bipartisan press conference at Southwest Iowa Renewable Energy, the same ethanol plant Trump spoke at earlier this summer when he promised a brighter future for farmers and ethanol producers.

Axne, Rep. Dave Loebsack (D., Iowa), Finkenauer and other members of the House Biofuels Caucus introduced bipartisan legislation that would force the Trump Administration to reallocate each gallon of biofuel demand taken from America’s farmers. READ MORE